Honda, Aston Martin warn of production snags after Brexit

An employee checks an Aston Martin DB11 in the quality inspection area at the automaker's plant in Gaydon, UK.

LONDON -- Honda and Aston Martin have warned British lawmakers that automakers in the UK could endure "semi-catastrophic" production interruptions if the European Union stops automatically accepting the nation's vehicle certification program once Brexit comes into effect.

Terms for Britain's departure from the EU will need to include agreements on so-called type approvals for UK-made autos so they can still be sold in the bloc's remaining countries, Patrick Keating, Honda Motor's government affairs manager in Europe, told parliament's business, energy and industrial strategy committee in London on Tuesday.

EU regulators have indicated that approvals from the UK Vehicle Certification Authority "will either no longer hold validity, or not be able to be extended," and Honda may have to look elsewhere for its European regulatory base for British-made cars, Keating said.

"Without VCA type approval, it really is quite a stark picture for us," with the potential for a "semi-catastrophic" halt to manufacturing, Aston Martin Chief Financial Officer Mark Wilson told the committee, because the England-based automaker produces cars exclusively in the UK.

Vehicles can only hold certification from one European location at a time, so if type approval in one country is no longer accepted, the manufacturer must go through the process of applying elsewhere for another, potentially forcing factory shutdowns until the paperwork is resolved, Society of Motor Manufacturers and Traders CEO Mike Hawes said.

Competitive question

Automakers with plants in Britain, including Honda, Toyota Motor and BMW Group, have been pushing UK authorities to ensure vehicles and components can continue to enter and leave the country with minimal trade barriers once EU ties end.

Honda has said it will not be able to afford the 10 percent export tariff that would be imposed on its UK-built cars if Britain had to return to World Trade Organization rules after a Brexit.

PSA Group said last week that the UK plants it acquired when buying General Motors's European operations will need to make a leap in competitiveness to offset risks from Brexit.

Honda's Keating told the committee that the automaker needs clarity by March 2018 on the trade framework because of the roughly yearlong lead times needed to prepare for the UK's exit from the bloc in April 2019.

Honda is looking at "increasing the amount of warehousing and the amount of stock that we'd have to hold if friction entered the border" with the EU, he said.